Renewable energy projects 'face funds hurdle'

Dubai, June 22, 2010

One of the biggest hurdles to the growth of renewable energy projects is financing, particularly as the infrastructure, materials and technologies involved in these projects require large upfront costs, a leading economist has said.

“Access to affordable energy is critical to economic progress, especially in the context of emerging and developing economies. Today, nearly 1.6 billion people globally have no regular access to reliable energy services,” said Dr Nasser Saidi, chief economist and head of external relations of the DIFC Authority.

“Governments will also need to provide regulatory and financial incentives for increased consumption and production of renewable energy, as well as phase out subsidies for petroleum based energy production,” he said addressing a workshop titled ‘Financing Renewable Energy Projects’, held at the DIFC Conference Centre, Dubai.

The event was held in partnership with the International Project Finance Association (IPFA), with participation from Masdar.

“The UAE has taken the lead in investing in mega-scale renewable energy projects particularly with the creation of projects such as Masdar and IRENA’s (International Renewable Energy Agency) decision to move its headquarters to Abu Dhabi. In 2009, the Middle East region invested a total of $1.67 billion in clean energy projects, a clear rise from the total of $745 million invested in 2007. However, in light of the global credit crunch, there is a clear need to explore alternative sources of funding as well as creating a sound legal framework to support renewable energy financing in order to maintain a leadership position in this fast-evolving sector,” Dr Saidi said.

“The strong regulatory framework and vast pool of financial expertise available within the Dubai International Financial Centre (DIFC) enables it to be a key facilitator for financing renewable energy projects. With a large number of financial institutions, DIFC can facilitate funding for a range of small and large-scale renewable energy projects as well as venture capital for start-ups,” he said.

“Renewable energy projects are challenging governments across the world. The recent incident in the Gulf of Mexico has highlighted the importance of developing this new energy source as quickly and economically as possible. IPFA strongly welcomes the initiative by the DIFC to raise awareness on finding alternate and sustainable methods of financing renewable energy projects,” said Geoff Haley, founder and chairman of the IPFA.